Home Ownership

[34064 Fighter Command]

9. home owners in their 40's and 50's are taking equity from their homes and buying 2nd, 3rd properties etc and building up buy to let porfolios as an alternative to pensions for their retirements.

But there is no guarentee that these properties will provide them with an income if they can't find people to rent them. Whereas a pension is usualy based upon a much broader range of investment which will include property as well as stocks & shares.

There is also the cost to a landlord of paying for the properties upkeep, council tax etc, regardless of wether the property is let or not. I'd rather keep my assets ' liquid ' rather than tie up my future income in bricks & mortar.

The real problem is that the private housing lets have no regulation applied to them, whereas with Council housing, rents were kept at a regulated level, & you could expect your home to be maintained by the Council in a reasonable condition. The Council also had an asset that they could use to encourage companies to locate to their particular location, knowing that there would be a ( temporary ) supply of housing for a sudden influx of people, whereas now people commute ridiculous distances between home & office simply because of unaffordable housing.

 

[Albion Rob]

In real terms, I very much doubt your parents place has risen in real value by 800%...seems a bit crude the way you have stated this.

Yes, extremely crude terms and of course they would have to buy something else if they were to sell it, but the point is that they could - if they wanted to - release the capital in their house and have a really good time of it. I am not sure whether that will ever be a possibility for a lot of people from our generation.

Say you have a house not that is worth 200k, do you reckon it will ever be worth, say, £1.5 million and that your salary will invrease from, for example, £40,000 per year to £1 million per year with no promotions no increases in salary larger than inflation.

What I was stating, as you say, in crude terms, is that the situation is totally different now than it was even 15 years ago. I predict that inheritance will play a larger and larger part, which I suppose adds an interesting aspect to the euthanasia debate.

 

[brunswick]

i got 20k stashed, good job and still wont get on the property ladder as I feel £170k for a house and utility bills is just too much.

I prefer to rent a room in lovely shared house for 400 no bills and enjoy life.

mortgage = 800 pm
gas/elec/water/ctax = 250 pm
maintenance/improvements = 100 pm

feck that.

but what are you going to leave your kids i keep hearing? knowlege and wisdom

 

[withdeanwombat]

Hmm.

A lot of this is very interesting.My motgage will be mort in about 7 years,and the value of my house has risen steeply,but then so has just about every other house in the land.

But what WAS a frightener was that recent tv programme about paying for care when you get old,and how the NHS has been forcing the sale of houses of the elderly to pay for care they assumed they'd paid for through taxation--in all it's forms.

It's means tested ,of course,so those who have bought their own home,often having to pay huge chunks of their after tax money to do it,and having foregone holidays,social life,a better standard of living(this is opportunity cost,I think) end up seeing the state grab their savings(as the investment in property is.)

The non property owners,of course,pass the means test.Their care home is state funded.

So is it better to spend,spend,spend,than it is to save,save,save?

Should I be making my property over to my children before I need nutrients fed directly into my system,need personal hygiene assistance,and cannot move by myself or recognise anybody?

Or should I just sell the blooming house,spend on a world wide holiday and let the govt.pick up my tab as my years advance?

Don't mock.It will come to us all.Tempus fugit.

 

[dwayne]

I think Lord B et al are slightly off the mark with this "speculator" analogy. I don't think Thatcher ever had this in mind, when selling off Council houses.

Dictionary.com describes a speculator as

Speculator

A person who trades (i.e. derivatives, commodities, bonds, equities or currencies) with a higher-than-average risk, in return for a higher-than-average profit potential. Speculators take large risks, especially with respect to anticipating future price movements, or gambling, in the hopes of making quick, large gains.

Now correct me if I'm wrong, but a property is hardly a high risk/high return investment, like, say putting money into a hedge fund. In the last 20 years an average property in real terms has returned 6% per annum, therefore they are tidy, safe investments (of course they provide somewhere to live as well which is handy!)

It does make me laugh when unsophisticated investors, brag and boast that they have made 800% returns in 20 years - when after refurbishment, repairs, adjustments for inflation etc they have seen nowhere near that kind of return.

 

[Lord Bracknell]

Whether the right to own property is a "divine" right is another debate.

In my view, people certainly don't have any sort of "right" to own more than one property - if the consequences of exercising that option is to deny decent housing to other people.

And "releasing the equity" in one property to take up landlordism - at high rents - is part of the problem that needs to be solved.

 

[Lammy]

Say you have a house not that is worth 200k, do you reckon it will ever be worth, say, £1.5 million and that your salary will invrease from, for example, £40,000 per year to £1 million per year with no promotions no increases in salary larger than inflation.

If you asked that question 15 years ago you would get the same answer.

My answer would be why not?

 

[Arthritic Toe]

And another thing

The BTL market is now dead. Just do the maths. With current property prices, the cost of the monthly payment on an interest-only mortgage is now more than can be charged in rent. Whilst BTL was highly profitable in a rising market, no one in their right mind will be entering the BTL market at the moment.

And another thing:

World interest rates are on the way UP. There is no way that the UK can remain out of line with the rest of the world without the pound tanking. In the city, the futures markets are already starting to price in rate rises in the UK. If you're taking out a variable rate mortgage now, you'd better make damn sure you will be able to afford increased monthly payments.

 

[Lammy]

The BTL market is now dead. Just do the maths. With current property prices, the cost of the monthly payment on an interest-only mortgage is now more than can be charged in rent. Whilst BTL was highly profitable in a rising market, no one in their right mind will be entering the BTL market at the moment.

What has this got to do with sandwiches?

 

[34064 Fighter Command]

i got 20k stashed, good job and still wont get on the property ladder as I feel £170k for a house and utility bills is just too much.

I prefer to rent a room in lovely shared house for 400 no bills and enjoy life.

mortgage = 800 pm
gas/elec/water/ctax = 250 pm
maintenance/improvements = 100 pm

feck that.

but what are you going to leave your kids i keep hearing? knowlege and wisdom

That's all very well until the Landlord dies, & his executors / beneficieries are faced with a huge bill for inheritance tax & have to put the house on the market, thereby putting you out on the street.

Who is going to want to buy a house with a sitting tenant ?

 

[Lammy]

i got 20k stashed, good job and still wont get on the property ladder as I feel £170k for a house and utility bills is just too much.

I prefer to rent a room in lovely shared house for 400 no bills and enjoy life.

mortgage = 800 pm
gas/elec/water/ctax = 250 pm
maintenance/improvements = 100 pm

feck that.

but what are you going to leave your kids i keep hearing? knowlege and wisdom

And when I'm still paying £800pcm in 15 years your rent will be £3000pcm and if you have kids that want to go to Uni...

 

[Uncle Spielberg]

" The BTL market is now dead. Just do the maths. With current property prices, the cost of the monthly payment on an interest-only mortgage is now more than can be charged in rent. Whilst BTL was highly profitable in a rising market, no one in their right mind will be entering the BTL market at the moment. "

£ 130000 1 bed flat
£ 20000 deposit
£ 110000 mortgage at 4.99% interest only = £ 457 pm

Rent for £ 600 ?.

Still profitable.

Certainly the buy to let killing was from 1998-2004. I would not do it now, not in Brighton, anyone wanted to do this

Buy in Hull. Very low prices, upcoming City, massive university.

 

[Arthritic Toe]

What has this got to do with sandwiches?

 

[Curious Orange]

This thread just makes me laugh. I'm 30 years old, earn just above average wages, and am a regular saver.

All I'd like is somewhere to live, maybe a little two up two down. But I can't afford it, and can't see myself affording it without getting married.

 

[dwayne]

And another thing

In the city, the futures markets are already starting to price in rate rises in the UK.

Not true!

Interest rates are likely to stay on hold this year and if anything may decrease by about .25% if any movement does occur. Stick to subjects you know about sunshine.

 

[Uncle Spielberg]

Dwayne is right.

 

[Albion Rob]

If you asked that question 15 years ago you would get the same answer.

My answer would be why not?

Yeah, suppose so. I guess we always think we're almost at breaking point or the point of levelling out. We'kk see, I suppose.

*hope you're right!*

 

[chip]

Whether the right to own property is a "divine" right is another debate.

In my view, people certainly don't have any sort of "right" to own more than one property - if the consequences of exercising that option is to deny decent housing to other people.

And "releasing the equity" in one property to take up landlordism - at high rents - is part of the problem that needs to be solved.

You'll start singing the Red Flag soon.

 

[Arthritic Toe]

Not true!

Interest rates are likely to stay on hold this year and if anything may decrease by about .25% if any movement does occur. Stick to subjects you know about sunshine.

Well, thats how I interpret these figures:

http://www.futuresource.com/quotes/quotes.jsp?s=LSS

What is your interpretation dwayne?

 

[Goring Gull]

And another thing

The BTL market is now dead. Just do the maths. With current property prices, the cost of the monthly payment on an interest-only mortgage is now more than can be charged in rent. Whilst BTL was highly profitable in a rising market, no one in their right mind will be entering the BTL market at the moment.

And another thing:

World interest rates are on the way UP. There is no way that the UK can remain out of line with the rest of the world without the pound tanking. In the city, the futures markets are already starting to price in rate rises in the UK. If you're taking out a variable rate mortgage now, you'd better make damn sure you will be able to afford increased monthly payments.

I won't be doing it to make a massive profit off teh rent , it will be purely to cover the full or even part of the cost in rent and covering the rest ourselves but long term you'll end up with a nice earner.